A “premarital agreement” is a contract made between two romantic partners who plan to marry. These agreements are also commonly called “prenuptial agreements.” There is no difference between a premarital agreement and a prenuptial agreement.
It is common for a person who has acquired significant assets to want to enter a premarital agreement with her fiance. The premarital agreement can protect assets owned before marriage, eliminate spousal maintenance in the event of a divorce, and can cover any other matter that is not criminal and which does not violate public policy. A.R.S. Section 25-203.A.
A premarital agreement can even be used to entirely “opt out” of Arizona community property law. If the parties to the agreement opt out of community property, then the income they earn during the marriage–and the assets purchased with that income–will NOT be divisible between the parties in the event of a divorce.
For the party to the agreement who has significant assets and income, the abrogation of community property makes the premarital agreement significantly more effective. As an example, a premarital agreement which identifies a pre-marriage IRA as the separate property of one party will protect that asset. If the premarital agreement also abrogates community property, however, then if the spouse begins participating in a new 401(k) during the marriage, the 401(k) would automatically be the participant’s separate property–and not subject to division with the other spouse in the event of divorce–because the money/earnings used to fund the 401(k) would not be community property in the first place.
The premarital agreement statute does not require that both parties to a premarital agreement have their own, independent counsel. As a matter of practice, however, when I draft a premarital agreement for a client, I insist that the fiance have her own lawyer. I do this to protect my own client. When the other party to the agreement has her own attorney advise her about the agreement before she signs, the agreement is almost certain to be enforceable in the event of a divorce.
Even a valid, enforceable premarital agreement, however, cannot fully protect one spouse from his own asset mismanagement during marriage. For example, if the premarital agreement abrogates community property, then during-marriage earnings–and real estate purchased in one spouse’s name with those earnings–would be the acquiring spouse’s separate property. If, however, the real estate is taken in both parties’ names, then in the event of a divorce, the jointly-titled real estate is likely to be equally divided between the parties.
If one party to a premarital agreement wishes to retain all assets acquired with her separate funds in the event she divorces, the best practice is to keep her assets separate from her spouse’s during the marriage. Any titled asset placed in both names during marriage has a strong chance of being equally divided in a divorce despite the existence of a premarital agreement.
Copyright © 2019 by Scoresby Family Law – J. Kyle Scoresby, P.C. All rights reserved.
